Cultivating Prosperity and Culture in California’s Capitol
Business Improvement Districts and the Sacramento Metropolitan Chamber of Commerce
Jacqueline Paige Sutton
Jamie Okh
Posted Friday, September 18, 2009

Q: As primary author of California's Property and Business Improvement District (BID) Law of 1994[1], what was the main purpose for this legislation?

A: The main goal was to build new partnerships that revitalize downtowns.  BIDs are classic public-private partnerships.  Public monies are collected through property tax bills, but the partnership is private sector oriented: it is led by the owners.  When the funds are collected, they go to a nonprofit organization that the owners control.  I wanted landowners to be able to say: "We are really going to make decisions that affect our downtowns and businesses and we are going to be a partnership with the city."

Prior to 1994, California did not have the necessary legislation to do this, even though 40 other states did at the time. We needed a law creating an organization - funded through parcel assessments- where property owners could create a collective pool of money and benefit from a subsequent collective package of services. 

So, the very specific purpose of the legislation was property assessments, but the larger purpose was moving our downtowns in the right direction.  The legislation has lived up to its goals more than we could have ever hoped.  No central clearing house exists to track when BIDs are formed; yet, we believe there are now over 250 of these property districts raising a great deal of money in California.  In Los Angeles, seven or eight districts carve-up central L.A., providing safety services, cleaning services, and marketing.  The City of Los Angeles has a total of about 34 districts and San Diego has a similar number.

Q:  Was there a precursor project that led to the legislation?

A: The process started in 1993, when we set out to focus on Sacramento. Unsure of what we were doing at that point, we started an organization of downtown property owners known as Downtown Sacramento First.  Then, we discovered a tool - business improvement district law - from other states, which led to the legislation. 

Q: Was restructuring the business development industry a long term-goal of the legislation?

A: Restructuring the industry was definitely a long-term goal.  When we created the legislation, we examined other states' relevant laws.  We borrowed ideas from New York, Michigan, and several other states.  We hoped the confluence of a whole lot of great ideas would help us create a model that works. 

I wanted landowners to ask: "What is this place going to be like five or ten years from now, and how can we make a difference?"  Prior to the legislation, that was not happening.  The public sector had the money, was organized, and was controlling the planning.  Writing new legislation that provided the opportunity for a public-private partnership was the chance to get owners in the driver's seat.  Consequently, the organizations have been enormously successful.  We try to keep them as private as we can because we want the flexibility to say, "This security program is not working.  Let's get rid of it and try another," without worrying about bureaucracy, public bidding rules, disclosures, and rules that tie the hands of cities.  We wanted these entities to move quickly with the private sector and they do. 

Q: What, if any, new legislation has been passed that supports your reasons for working on and with the Property and Business Improvement District (BID) Law of 1994?

A: The legislature has passed quite a few amendments to the law that has been very helpful.  Mostly, they have modified the law to expand its applicability to other kinds of special districts, which are popping-up, and giving it more flexibility. 

As of January 2004, we had the ability to take out bonds against the districts.  If owners want to raise money for capital improvements (build new kiosks, parks, or sidewalks), which are expensive and durable unlike pay-as-you-go services (security, maintenance, and marketing), they have the ability to avoid full-payment in year-one and create a thirty-year bond.  Expansions to the law have furthered our ability to redevelop the urban core.

Q: Do Business Improvement District (BID) projects synergize or clash with environmental regulations and public policy?

A:  These districts emerged primarily in major downtowns as clean and safe initiatives: how do we fight crime better, how do we obtain clean and safe streets, how do we promote an area?  To the extent that BIDs are an urban movement, these BID projects mesh well with environmental planning.  The more we implement infill development[2] the more we can take advantage of existing infrastructure as opposed to pushing out the boundaries of the city limits.  Infill development is more sustainable and environmentally friendly.  Any projects that revitalize, promote, and attract people to the core line-up align well with environmental objectives of getting people to want to live, work, and shop in the downtown areas.

Regarding the clash with environmental regulations, the California Environmental Quality Act (CEQA)[3] requires an Environmental Impact Report (EIR) (an informational document informing public agencies of the environmental effects of a project, ways to minimize effects, and reasonable alternatives) for any discretionary project that may have an impact on the environment.  We have faced, at various times, the question of whether BIDs need to do an EIR and the answer has been no.  Under CEQA, an exemption for mechanisms dealing essentially with financing exists; financing is the focus of BID projects and not the test for CEQA.  However, if we were to set-up a district and that district wanted to demolish and erect buildings in an area - something that requires the discretionary approval of the city council - then such an undertaking would have its own environmental requirements: its own EIR, negative declaration[4], or some associated report or study. 

Q: Will the use of BIDs as a tool expand? What does the future hold for BIDs?

A:  It is a tool that really works and we are going to see it expand to other areas.  We are already seeing a lot of other kinds of districts.  We did our first restaurant district this year along 28th street in Sacramento.  The thought was restaurants could band together, raise some money, and promote themselves.  With a little extra security, the owners could market the restaurants in a joint way, and again, make it a destination.  We wanted to make a cool area where people want to go.  These districts, to some degree, can be thought of as analogous to malls.  Malls charge an extra fee to their tenants for security, maintenance, and marketing. We created a way to link downtown businesses that had not been affiliated before. 

A lot of good things are happening, and I predict more specialized kinds of restaurant districts will form in the future.  Even beyond restaurants, there has been talk in several different districts about wine-tasting rooms gathering together, golf courses joining forces, and even hotels will follow suit.  People are beginning to realize that it is not just about going it alone.  They share common interests, such as keeping areas safe and clean and providing a positive customer experience, and it makes sense to figure out what those interests are.  Business owners can be so much more powerful as a group than just one person at his or her corner. 

There is so much potential.  I really want to do more. However, I'm very lucky, we are doing great, and I'm enjoying it.

Q: You do a lot of work with the Sacramento Metropolitan Chamber of Commerce. Can you tell us a little bit about its main goals and objectives and describe some of your experiences with it?

A: The Metro Chamber fosters economic prosperity in six local counties.[5] With approximately 2500 local business members it is the second largest chamber in the state, behind San Diego. They are tremendous advocates for business growth and development, which ties directly to my passion for business. The advocacy is on a local basis before the city council, boards of supervisors, special districts, utilities, and other city entities. The Metro Chamber stands with a very large and broad constituency to explain what legislation or action will help or impede local businesses, job creation, and economic growth.

Another goal is to bring people together on a regional basis in a way that other organizations cannot. They work on public policy across a broad spectrum of policy issues and on both sides of the aisle, rather than being issue or party specific. The Metro Chamber also has wonderful group trips every year that help bring all of the members and community leaders together. Every year we do the "Study Mission" where one hundred Metro Chamber members and local officials go to a different city each year to learn about specific successes or failures that are relevant to Sacramento. Our Study Mission to Portland a few years ago was particularly helpful. We learned how they implemented a new communication network with their city's building department that increased interfacing with developers. By doing this they protected the interests of their city by expediting the flow of information to and from developers. After that Study Mission, the city successfully recruited Ray Kerridge from Portland to become the assistant city manager of Sacramento. He was integral to revamping the permitting system, as well as the entire culture of business development in Sacramento. From a development standpoint, Sacramento went from being one of the worst jurisdictions to do business in to one of the best, mostly because of Ray Kerridge's efforts and leadership. That is probably why he is now the City Manager of the City of Sacramento. There are many more success stories like that.

Q: Do you have a position on the Political Action Committee of the Sacramento Metro Chamber (PAC)? What are the PAC's main functions and current objectives?

A: I am currently a board member, but was a chairman of the Metro PAC for quite a few years. The Metro PAC's main goal is to influence the selection of candidates for local office, including the State Legislature. It raises money from members and others who would like to increase their influence on elections. The chamber is primarily pro-business and does not try to promote partisan agendas. The Metro PAC has many links to local government: appearing before them, going on trips with them, and partnering with them on local development projects.

Another purpose of the Metro PAC is to add to the Metro Chamber's influence and advocacy ability. One of the things you discover in politics is that the name of the game is winning or losing elections. If an organization is instrumental in helping people win or lose elections, it has a seat at the decision making table.

Q: In what direction do you see your practice heading? Are there specific areas that will become more significant? 

A: Our practice is heading where the demand seems to go, such as the commercial corridor sector. One of these clients is the Sunrise MarketPlace mall. It was built in the 1960s or 1970s and they felt they needed to make changes and updates. All of the business owners' questions centered on how they could come together, contribute as a group, and improve the mall as a whole.  That is exactly what a BID helps to facilitate and develop. Through their involvement with the BID, we helped make this shopping center a destination. We helped develop their new name and logo, and marked their territory with large entry point signs and maps. By using a little bit of the money we helped raise through district contributions, they were able to create a large shopping center that is well marketed and attractive. There are all kinds of shops, restaurants, and financial services that are included now because all the owners united to develop a cohesive unit. Even though they are all competitors to some extent, they recognized that if they work together, they can do even better.

[1] Cal. Sts. & Hy. Code §36600 (2008).

[2] Infill development involves a process of developing under-used parcels within urban areas that are already largely developed.

[3] See Cal. Pub. Res. Code  §§ 21000-21177 (2007).

[4] A negative declaration is a document stating that no substantial evidence that the project may have a significant effect on the environment exists.

[5] The six counties include El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties.